Falkland Oil & Gas Ltd. and Desire Petroleum PLC plan to merge and to farm out certain North Falkland basin licenses in the Falkland Islands to Premier Oil Exploration & Production Ltd. and Rockhopper Exploration (Oil) Ltd.
In exchange for the farmout of the PL004a and PL004c licenses, Premier and Rockhopper are to fund the combined group’s share of the cost of two exploratory wells, one on each license. Completion of the farmout is subject to the combination of FOGL with Desire, government approval, and completion of definitive documents.
Overall, the companies said, the combination and the farmout will enable the execution of an enhanced drilling program of five wells, including two in the South Falkland basin in conjunction with Noble Energy Inc. and Edison International, and three in the North Falkland basin, one of which will target the Zebedee prospect.
The next drilling campaign is expected to be fully funded from existing cash, the farmout, and other previously completed farmout agreements.
FOGL and Desire shareholders are to vote on the merger in November, and completion is expected by the end of 2013.
The combined group will be a balanced, focused E&P company with exposure to all known major hydrocarbon plays in the Falkland Islands.
The combined group will have a $170 million cash balance, sufficient for the five-well program that is expected to begin in late 2014.
The first of the two South Falkland basin wells will target the Diomedia fan complex (see maps, OGJ, Dec. 3, 2005, p. 35).
The three North Falkland basin wells are to include the Zebedee exploratory well that will aim to prove the extension of the southern part of Sea Lion oil field and also new reservoir targets on PL004b. The other two wells are expected to be drilled on PL004a and PL004c, pursuant to the farmout, targeting the Isobel and Jayne prospect stacks.